Paying People in Vietnam
Vietnam is becoming an increasingly popular country to do business in, especially for multinational corporations who are spreading their operations away from China and through Asia-Pac.
This means a need for in-country expertise. Here we look at some basics of Employment Law and Personal Income Tax in Vietnam.
HR & Employment Law in Vietnam
The Labour Code in Vietnam sets out the legal rights and responsibilities of both employers and employees for areas such as employment contracts, wages and overtime, labour agreements, hours of work and payment of social insurance.
The current law provides for a working week of 48 hours and working day of eight hours. Overtime is strictly regulated and may not exceed more than 50% of an employee’s regular working day, with the total overtime per year at no more than 200 hours.
For maternity leave, employees in Vietnam are entitled to four to six months’, depending on individual circumstances. During maternity leave, a female employee who has paid social insurance is entitled to a social insurance allowance equal to 100% of salary and an additional one month’s salary allowance.
On 18 June 2012, a revised Labour Code was passed by the National Assembly (New Labour Code). The New Labour Code will come into effect from 1 May 2013, together with about 21 new implementing decrees and circulars.
Personal Income Tax in Vietnam
For individual tax purposes, Vietnam residents are individuals that:
- Spend 183 days or more in Vietnam in a calendar year, or in 12 consecutive months from the date of entry to the country;
- Maintain a residence in Vietnam;
- Has leased a residence from 90 days to less than 183 days in a tax year, unless they can prove residence in another country.
Vietnamese residents are taxed on their worldwide income, while non-residents are taxed only on Vietnamese-source income.
For employment income, progressive rates range from 5% to 35% apply to residents, while non-residents are subject to a flat rate.
Personal Income Tax Rates
|Annual Taxable Income (million VND)||Tax rate %|
|0 – 60||5|
|6 – 120||10|
|120 – 216||15|
|216 – 384||20|
|384 – 624||25|
|624 – 960||30|
|More than 960||35|
Personal Income Tax is collected through Payroll in Vietnam, and the employer acts as the withholding agent. Tax has to be declared and paid provisionally on a monthly basis by the 20th day of the following month.
Doing business in an unfamiliar country can be complicated at the best of times, but when it comes to paying your employees that work there, it adds a level of complexity and urgency to get it right.